American International Group Inc., the largest insurer, and Lehman Brothers Holdings Inc., the biggest mortgage-bond underwriter, retreated more than 6 percent as analysts warned of more writedowns related to bad real-estate loans. Centex Corp. and Pulte Homes Inc. sent homebuilder shares to a three-week low on a government report that builders broke ground on the fewest houses in 17 years. Staples Inc. decreased the most since 2006 and Saks Inc. dropped as much as 14 percent after saying results will miss forecasts.
The Standard & Poor's 500 Index lost 11.45 points, or 0.9 percent, to 1,267.15 at 11:33 a.m. in New York. The Dow Jones Industrial Average declined 119.69, or 1 percent, to 11,359.70. The Nasdaq Composite Index slipped 21.15, or 0.9 percent, to 2,395.83. Almost seven stocks dropped for every two that rose on the New York Stock Exchange.
More than 332 million shares traded on the NYSE, or about 15 percent less than the same time a week ago. Trading was the slowest for a full session since Dec. 27 yesterday.
The S&P 500 is down 19 percent from an October record after the biggest U.S. housing slump since the Great Depression slowed consumer spending and spurred turmoil in credit markets. The U.S. has fallen into a recession that may topple some of the nation's biggest banks, Kenneth Rogoff, former chief economist at the International Monetary Fund, said today.
The S&P 500 Financials Index lost 3.2 percent, the most among 10 industries. Bank of America Corp., the second-biggest U.S. bank, fell $1.24 to $28.06. JPMorgan Chase & Co. declined $1.37 to $35.37.
Centex lost 38 cents to $14.33. Pulte retreated 26 cents to $12.27. The S&P 500 Homebuilders Index declined 1.9 percent.
Builders in the U.S. broke ground on the fewest houses in 17 years in July, signaling the residential-construction slump will continue to hurt economic growth. The 11 percent decrease to an annual rate of 965,000, the lowest since March 1991, followed a 1.084 million pace the prior month, the Commerce Department said. July's level was higher than economists anticipated. Building permits, a sign of future construction, also fell.